The Growing Popularity of Subscription-Based eCommerce

The term “Netflix and Chill” had moved from being a trend to becoming a “verb”. How did it become such an organic part of our life? The credit for the same goes to the subscription-based eCommerce model. Subscription-based eCommerce is growing at an exponential pace. Research suggests that 15% of online buyers are already on this ship. Considering that the number of online shoppers in 2021 is expected to cross 2.14 billion, this is a trend to pay attention to.

What is subscription-based eCommerce?

Subscription-based eCommerce is a business model that allows customers to subscribe to products or services they need on a regular basis. This business model is usually employed by sellers for recurring orders, but its model becomes an ingenious customer perk by providing sensible and flexible purchasing alternatives to customers.

The subscription cycle can vary according to time-periods such as annual, weekly, or monthly and even often based on the customer’s preference. Reports suggest that by 2025, the Global Subscription eCommerce market will touch US$ 478.2 billion!
The subscription-based eCommerce model focuses on driving customer retention by attracting users to become long-term customers from one-time buyers. There are primarily three kinds of subscription models.

  • Replenishment subscription model: Allows consumers to automate the purchase of commodity products.
  • Curation or the discovery model: Provides highly personalized and customized experiences to surprise or delight the customer.
  • Bargain or access subscriber model: Provides exclusive ‘members-only perks and bargained prices at a monthly fee.

Along with these, there are the fixed pricing models, unlimited use models, pay-as-you-go or convenience model, freemium, etc.

Challenges with Subscription-based eCommerce

While the Subscription-based eCommerce model strengthens customer loyalty, increases the lifetime value of each customer, boosts ROI, and reduces inventory risk, it can be challenging to seamlessly grow and manage a subscription-based eCommerce business at scale.

Here are some of the challenges that businesses desiring to leverage this model need to navigate.

1. Enabling instant activation

Irrespective of when the customer receives the product, in today’s day, the customer wants instant service activation. For those wanting to leverage subscription-based eCommerce to attract and retain customers, this means improving their capabilities of order orchestration, provisioning, and activation. It demands a swift order fulfillment process that eliminates any mistakes that can lead to errors in subscription plans.

End-to-end automation of the order fulfillment process, coupled with strong inventory management capabilities, is essential to drive subscription-based eCommerce by avoiding billing errors and providing the customer exactly what she wants.

2. Providing price personalization

Price-personalization and customization are big draws of the subscription-based eCommerce model. However, with a range of products and services at play, and multiple permutations and combinations that customers might demand, enabling price personalization can become a challenge.

eCommerce businesses thus have to expand their capabilities to provide price personalization and should be able to provide limited period discounts, promotional bundles relevant to the customer’s needs by ably capturing the demand. For this, eCommerce businesses have to have the right billing systems in place that allow them to comprehensively capture all the little customer details and allow them to amend and manage customer records easily.

3. Payment security and multi-currency support

Payment security and offering multi-currency support goes a long way in ensuring customer loyalty. The subscription eCommerce models have to focus heavily on transaction security as financial information is often stored with them to provide a seamless user experience. Since this eCommerce business model will be storing sensitive financial information of many customers, it has to have a robust security posture that ensures that customer data is secure at all times.
Additionally, given the global market, along with payment security, these businesses also should be able to provide multi-currency support and improve tax accuracy for each customer. Having a billing solution that integrates seamlessly with taxation platforms contributes to the user experience by ensuring correct billing and minimizing tax audit risk.

4. Managing varying product customization levels

The greatest draw of the subscription-based eCommerce model is that it offers immense flexibility to the customer. So, it is not uncommon to see customers wanting to customize their monthly orders. While this is a great advantage for the customer and can lead to customer loyalty and even customer advocacy, enabling the same can be a big challenge to the eCommerce providers in the absence of robust billing systems.
Managing varying membership and customization levels can cause enormous complexity in inventory management and order fulfillment. eCommerce businesses need to have complete insight into customer buying patterns, market trends, and their inventory to manage these changes and scale as required. Again, a strong billing and subscription management software alleviates these challenges.

5. Empowering the customer

Customer empowerment is a crucial tipping point of customer retention in the subscription-based eCommerce model. The customers are attracted to this model owing to the convenience it offers. Thus, to enjoy customer loyalty and then customer advocacy, eCommerce businesses have to also empower their customers by allowing them to control their subscription plans.
Providing customers with a single interface that allows them to update their account information, change account profile information, contact info, and add new payments, view invoices, pay instantly, and download invoices, etc. independently goes a long way.

A robust billing and subscription management software is the backbone of any subscription-based eCommerce business. Such a solution, powered by the latest technologies, can seamlessly connect the right data points, account for the right variable, and help businesses in creating elevated customer experiences. A comprehensive and secure billing and subscription management solution not only makes sure that billing and invoicing happens correctly and in time but also contributes heavily towards customer satisfaction, customer retention, and customer advocacy.

Take a demo of OneBill, an intelligent end-to-end revenue management tool to power your business.
recurring billing, subscription billing software, usage based billing, cloud billing software, SaaS billing software, CPQ, revenue management software, invoice software, best invoicing software, VoIP billing software

Sharing is caring!